If you try to find out how expensive it is to raise a child, you see lots of different figures. The Wall Street Journal thinks it costs $47k a year. The FDA calculator thinks it’s more like $13k a year. Early-retirement gurus like Mr. Money Moustache think it costs virtually nothing. How is that last category coming up with their numbers?
I can see two sides to this – if you have at least one stay-at-home parent, live in a cheap area, and generally reduce expenses, yes, I agree, raising children doesn’t have to be expensive. People all over the world do it for a lot less than Americans spend.
Even American spending varies wildly by income level. Higher-income families spend over twice as much as lower-income families.
Let’s say we wanted to be a one-income household with a young child. How would we manage?
– One stay-at-home parent means virtually no childcare costs.
– Health care (insurance, copays) for all three of us might be $3k.
– A two-bedroom apartment in Cambridge, MA with utilities might be $21.5k a year.
– Spending money (clothes, vacations, cell phones, entertainment): $5k a year.
– Groceries: $200/month; $2.4k a year.
– Taxes: $1k a year
– Saving: $4k a year
– Transit (public transit pass, bike repair, etc): $900/year
That would put our expenses around $38,000 a year. I used to earn $33,000 as an administrative assistant, so this would be doable if you could earn a little more. If we earned less than this, we’d probably move to somewhere cheaper than Cambridge.
Of course, this isn’t what we actually do.
For one thing, we don’t reduce expenses as much as we could. The Boston area is expensive, but we like it. We like living near Jeff’s family. We like the public transit system. We like the thriving folk dance community. We like being near great universities and the people they attract. And while we could live more cheaply in another city or a rural area, we think the benefits of this environment and community outweigh the costs.
Also, we use money for more than just establishing our own quality of life. We value our family a lot and we prioritize ourselves financially, but not to the expense of all else. Specifically, we donate a good chunk of our income (50% this year) to the best charities we can find. That’s possible because we have two incomes.
I can see the appeal of retiring early, working part-time, or having a stay-at-home parent. But I also value other people’s children, and this year we expect to save about 20 people’s lives from malaria. To me, that’s totally worth it.
As for the question of how much it will cost to raise our child: Jeff and I write down everything we spend, so I’ll let you know after the first year.
Update: what we spent in the first year.